October 28, 2003
Robert J. Dostal, Jr.
Motorcoach Marketing International, Inc.
6920 N.E. 4th Lane
Lane Ocala, Florida 34470
Re: Charter Complaint
Dear Mr. Dostal:
The Federal Transit Administration (FT A) has completed its review and investigation of the complaints
filed by Motorcoach Marketing International, Inc., Fame Tours, Inc., and the United Motorcoach
Association that principally allege certain bus service provided by the Metropolitan Transit Authority of
Harris County, Texas, (Houston METRO) in connection with the annual Houston Livestock Show and
Rodeo (Rodeo) was in violation of the FTA's Charter Service regulation, 49 CFR Part 604. As each of
the three complaints sets forth essentially the same allegations, this letter will serve as the FTA's
response to all three of the complaints.
Specifically, it has first of all been alleged that the City of Houston, Texas, for many years has awarded
a contract to Houston METRO for the provision of bus service in connection with the Rodeo and,
consequently, Houston METRO is providing charter service for the Rodeo with federally funded
equipment in violation of the FTA's Charter Service regulation. Secondly, it is alleged that Houston
METRO, as a public transportation provider, has engaged in a monopoly with its special event bus
service in Houston, Texas. Finally, it is alleged that Houston METRO improperly uses federally funded
buses to exclude many private Operators from competing for charter service for the Rodeo and other
With respect to the first allegation in the complaint concerning impermissible charter service being
provided by Houston METRO in connection with the Rodeo, the FTA has conducted a thorough
review of the role and manner in which Houston METRO has provided the bus service in this case. As
a part of the analysis to determine whether the Rodeo service provided by Houston METRO in this case
is impermissible charter service or permissible mass transportation, it will be helpful to review the
definitions of the terms "charter service” and "mass transportation" as they are defined in the FTA's
Charter Service regulation and in the Federal Transit Act, respectively.
The term "charter service" is defined in 49 CFR Section 604.5(e) as follows:
[T]ransportation using buses or vans, or facilities funded under the Acts of a group of
persons who pursuant to a common purpose, under a single contract, at a fixed charge
for the vehicle or service, have acquired the exclusive use of the vehicle or service to
travel together under an itinerary either specified in advance or modified after having
left the place of origin.
The term "mass transportation" is defined in the Federal Transit Act at 49 U.S.C. Section 5302 (a) (7) as
Mass transportation means transportation by a conveyance that provides regular and
continuing general or special transportation to the public, but does not include school
bus, charter, or sightseeing transportation.
Although perhaps not readily apparent from the above definitions, based on the language in the
preamble to the FTA's Charter Service regulation, 52 Fed. Reg. 11916 (April 13, 1987), and many FTA
administrative decisions that have since interpreted these definitions, there are three important
characteristics that distinguish "mass transportation" from "charter service".
The first characteristic of mass transportation is that the service provider must exercise a significant
degree of control over the transportation. By contrast, an operator that provides charter service typically
does not possess any control in establishing, for example, the schedule or trip destination. Therefore, to
determine the degree of control in this case, the FTA must ascertain the extent of Houston METRO'S
role in establishing the schedules, fares, and the routes of the service. A second, characteristic of mass
transportation is that the service must be designed to benefit the public at large and not some special
organization or group of persons. Charter service, on the other hand, will involve a single contract for
transportation between the service provider and an organization or a group of persons. Thus, the FTA
will examine how the service was structured in this case and whether the service in this case was
intended to benefit an organization rather than the general public. Finally, the third characteristic of mass
transportation is that the service must be open to the public and not be closed-door service. As charter
service is service exclusively for an organization or a group of persons, the FTA will review whether the
public was notified of the availability of open-door service in this case or whether the service provided
to the Rodeo was closed-door service to the patrons of the event. Therefore, in view of the foregoing
characteristics, the FTA conducted the following analysis of pertinent aspects of the service provided by
Houston METRO in this case to determine whether Houston METRO engaged in impermissible
charter service or permissible mass transportation.
Did Houston METRO exercise a sufficient degree of control aver the schedules, fares, routes, and the
equipment that would be used to provide the service?
The record reflects that Houston METRO entered into a one-year contract - as it had done in previous
years - with Houston Livestock Show & Rodeo, Inc. (Corporation), a non-profit
corporation that sponsors the Rodeo, to coordinate and provide transportation services for this annual
event. This one-year contract between Houston METRO and the Corporation, however, is not a "single
contract" as that term is used in the definition of charter service because the recipient's control of the
transportation is not significantly diminished by the terms of the contract. Rather than requiring
Houston METRO to provide transportation under a single contract to a specific group of persons at a
fixed charge using a certain number and type of vehicles, the contract in this case essentially amounts to
a cost-sharing arrangement whereby the Corporation will participate in fifty percent (50%) of the fully
allocated cost for transportation service provided by Houston METRO in connection with the Rodeo.
Indeed, as to the issue of control, Article 1 of the contract specifically provides in relevant part that the
Corporation "shall exercise no control over METRO'S employees, servants, agents, subcontractors or
representatives, nor the method or means employed by METRO in the performance of such work or
services". Article 2 of the contract, on the other hand, provides that Houston METRO would provide
transportation services on "routes specified by" the Corporation. While there is a partial conflict
between Article 1 of the contract that allows Houston METRO to have complete control over the
"method and means" of transportation and Article 2 that allows the Corporation to specify "routes", it is
the FTA's view that the Article 2 provision does not per se appreciably detract from the overall degree
of control exercised by Houston METRO in this case. In fact, the record further supports that Houston
METRO, not the Corporation, determines what level of service will be required, what number of buses
will be used, what type of buses will be used, and what schedules will be operated. Moreover, with
respect to the fares charged for the transportation, the record reflects that Houston METRO, not the
Corporation, establishes the individual fares for the transportation provided during the Rodeo based
upon an estimate of the fully allocated costs and projected rider ship. Clearly, therefore, based on the
express terms of the contract and the facts in this case, Houston METRO, not the Corporation, exercises
substantial control over the "method and means" in providing transportation in connection with the
In addition, it is noted that the degree of control exercised by the recipient in this case is clearly
distinguishable from that exercised by a grant recipient in a recent case decided by the FTA on January
2, 2003, involving the Rochester-Genesee Regional Transportation Authority (RGRTA). Among the
findings in the RGRTA case whereby it was determined that the grant recipient provided impermissible
charter service in connection with an annual golf tournament, the FTA specifically found that the event
sponsor, rather than the recipient, exercised control over the bus schedules, the number of buses, and the
type of buses that would be used for the service. That is clearly not the case in this instance because
Houston METRO possesses control over virtually all aspects of the service whereas, by contrast, in the
Rochester-Genesee case the recipient in fact had very limited control of the service. Accordingly, based
on the facts in this case, the record establishes that Houston METRO exercises not only a sufficient, but
a substantial, degree of control over the schedule, fares, and the equipment that are used to provide
service in connection with the Rodeo.
Did Houston METRO design the service to benefit the public at large or the Corporation?
Reviewing the record in this case, it is apparent that Houston METRO widely advertised to the public
the availability of the transportation service that would be provided in conjunction with the Rodeo.
Specifically, Houston METRO published notice of this transportation service in printed materials, such
as in printed bus schedules and in daily newspapers in the Houston, Texas, area,
and further made spot announcements of the availability of this service in the electronic media in the
Houston, Texas, area. In addition, Houston METRO posted notice of the availability of this
transportation on its internet website. There is no evidence in the record to show that Houston METRO
sought to limit service in this case to the Corporation or only to patrons who would attend the Rodeo.
To the contrary, the record would reflect that Houston METRO designed and advertised this
transportation service to clearly benefit the public at large and not just the Corporation.
Did Houston METRO provide open-door or closed-door service?
To determine whether the service provided by Houston METRO was in fact "open-door" service, the
FTA often considers the intent of the recipient in offering the service. This intent can be "evidenced in
part by the efforts that the recipient has taken to market the service to the public. Generally, this effort is
best evidenced by publication of the service in the recipient's preprinted schedules. Washington Motor
Coach Association v. Municipality of Metropolitan Seattle, WA-09/87-01 (March 21, 1988). In
addition, efforts by the recipient to market the service to the public will also be taken into consideration.
Blue Grass Tours and Charter v. Lexington Transit Authority, URO-III- 1987. As discussed above,
Houston METRO widely advertised the service to the public and notice of the service was further
placed in printed notices and bus schedules. Moreover, in response to the FTA's direct inquiry, Houston
METRO has represented that the service offered in connection with the Rodeo is open-door, and not
closed-door, service to the public. As open-door service, anyone may pay the fare established by
Houston METRO and be entitled to use the service. Furthermore, the FTA's review of a public
advertisement that includes information regarding the service for the Rodeo supports Houston
METRO's representation that service was not limited exclusively to patrons who attend the Rodeo but
rather the record would reflect that the service was available to anyone who paid the fare.
Accordingly, based on the foregoing review and analysis of the facts in this case, it is the FTA's finding
that the transportation service provided by Houston METRO in connection with the Rodeo does not
constitute impermissible charter service. Rather, based on the facts in this case, the FTA finds that the
transportation service provided by Houston METRO in connection with the Rodeo is consistent with
the elements of "mass transportation" as this term is defined in the Federal Transit Act and as it has been
interpreted by the FTA. Moreover, the FTA finds that the service is "regular and continuing" because
Houston METRO has provided service for this event - which has been held annually in Houston for
over sixty years - on an annual basis for a considerable number of years. In addition, it is the FTA's
finding that the service is "general service" because it is "open-door" service that was designed by
Houston METRO to benefit the public at large.
The second allegation in the complaints states that Houston METRO uses FTA-funded buses to engage
in a monopoly with special event bus service in Houston, Texas. However, the record reflects that there
are only thirteen (13) special events, including the Rodeo, for which Houston METRO participates in or
coordinates transportation service. On the other hand, it is estimated by the Greater Houston
Convention & Visitors Bureau that there is an average of 250 conventions per year in the Houston area
and this figure does not include smaller conferences and other events. As Houston METRO coordinates
and participates in service for only thirteen (13) special events, which represents only a very small
percentage of the total number of conventions and other special events that are held annually in the
Houston area, there is thus no evidence to support the allegation
that Houston METRO has established a monopoly over the provision of special event transportation
service in Houston, Texas.
The third allegation concerns Houston METRO's role in the thirteen (13) special events for which it
does participate in or coordinate service and whether it improperly excludes private operators from these
events. The facts reflect that Houston METRO - as the public transportation agency for the greater
Houston metropolitan area - issued and widely advertised an invitation for bids on September 21, 2001,
to solicit private operators that would be interested in providing special event transportation services for
thirteen (13) events, including the Rodeo, in the Houston area during calendar years 2002 and 2003.
This invitation for bids, however, was not a federally funded solicitation and therefore it was not subject
to the FTA's procurement requirements in Circular 4220.1D (now Circular 4220.1E), 'Third Party
Contracting Requirements", although it appears that the procedures used by Houston METRO in the
selection of prospective contractors were nonetheless substantially in accordance with the principles and
requirements of Circular 4220.1D.
Although not subject to the FTA's procurement requirements, Houston METRO has provided
information to the FTA regarding the selection process. Assuming that the service provided by
Houston METRO in connection with these other events is consistent with the manner in which service
is provided for the Rodeo, the service will be deemed permissible mass transportation. As to the
selection process, Houston METRO advises that the invitation for bids invited prospective contractors
to provide a schedule of available vehicles and revenue-hour prices for providing transportation service
for the Rodeo and twelve other special events in calendar years 2002 and 2003. Based on the data
provided by the interested private operators, Houston METRO selected qualified operators to
participate in providing service for the Rodeo and other special events based on need and the
contractor's equipment availability and relative cost-effectiveness. In addition, with respect to service in
connection with the Rodeo, although Houston METRO provides much of the service, it is the FTA's
understanding that private operators, in accordance with or in addition to this selection process, in fact
provide the largest number of buses for this event. Therefore, having reviewed the selection process
utilized by Houston METRO for the participation of private charter operators in providing service for
the thirteen (13) events, it is the FTA's view that the selection process appeared to be based primarily on
valid, objective criteria and Houston METRO employed this process in a fair manner to obtain the
participation by many, but not all, private operators who responded to the solicitation.
Pursuant to 49 C.F.R. §604.19, the losing party or parties may appeal this decision with ten days of
receipt of this decision. The appeal should be sent to Jennifer Dorn, Administrator, FTA, 400 Seventh
Street, S.W., Room 9328, Washington, DC. 20590.
If you have any questions or comments regarding this decision or the appeal procedure, please feel free
to call Eldridge Onco, Regional Counsel, or me at (817) 978-0550.
Robert C. Patrick